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CVM: Fiscal Year 2020 Results


By John Vandermosten, CFA



Fiscal Year 2020 Operational and Financial Results

On December 30, 2020 CEL-SCI Corporation (NYSE:CVM) reported its fiscal year 2020 operational and financial results for the year ending September 30, 2020 and filed its companion 10-K.

Following a near decade-long duration of the IT-MATTERS trial that evaluated biologic Multikine in head and neck cancer, the company announced the trial had achieved the targeted 298 event threshold on May 4, 2020. Reaching this milestone signalled the company’s contract research organization (CRO) to begin data evaluation. The study is now undergoing database lock and analysis. In December 2020, CEL-SCI provided an update on the study data analysis highlighting that it was being conducted according to a plan that was approved prior to data lock. The effort has been complicated by both the geographical diversity of trial sites and delays related to the pandemic. CEL-SCI will publicize the results once the full analysis has been finalized and results are presented to the firm.

In its secondary platform, CEL-SCI has initiated the development of an immunotherapy targeting SARS-CoV-2 using the company’s patented Ligand Epitope Antigen Presentation System (LEAPS) peptide technology. Initial in vivo experiments demonstrated that after a single injection, LEAPS COVID-19 conjugates induced antibody response faster and in higher titers than expected against a highly conserved region of SARS-CoV-2, paving the way for challenge studies using live virus at the University of Georgia Vaccine Center. Following the end of the fiscal year, in December 2020, CEL-SCI announced results from its SARS-CoV-2 virus challenge in human ACE2 transgenic mouse models. LEAPS COV-19 peptides achieved a 40% survival rate in the treated group compared to 0% survival in the two control groups.

In September, CEL-SCI’s LEAPS platform was granted the patent entitled “Method of Preparation and Composition of Peptide Constructs for Treatment of Rheumatoid Arthritis,” by the European Patent Office.

The 10-K reported FY:20 grant revenues of $559,000, up 21% from $463,000 in FY:19 due to a Phase 2 Small Business Innovation Research grant of $1.5 million that was disbursed over multiple years. Total operating expense rose 43% for the year to $29.5 million versus $20.7 million in FY:19.

For the fiscal year ended September 30, 2020, compared to the fiscal year ended September 30, 2019:

‣ Expenses for R&D were $17.8 million up 41% from $12.7 million, primarily driven by $2.1 million in expenses to prepare for the potential filing of a BLA and commercial manufacture of Multikine and $2.7 million in employee stock compensation expense partially offset by a decrease of approximately $1.2 million related to the Phase III trial;

‣ G&A expenses were $11.7 million, up 46% from $8.0 million, on a $3 million increase in employee stock compensation costs;

‣ Loss on derivative instruments was ($349,000) compared to ($761,000), due to change in fair value of derivative liabilities based on CEL-SCI’s stock price;

‣ FY:20 saw warrant inducement expense of ($806,000), absent in the prior year;

‣ Other non-operating gain of $888,000 was up 63% from $546,000 relating to a Securities Purchase Agreement with Ergomed;

‣ Net interest expense was ($1.0) million compared to ($1.8) million due to reduction in interest rate applied to CEL-SCI’s finance leases, adjusted to reflect adoption of ASC 842;

As of September 30, 2020, cash was $15.5 million and cash burn for FY:20 was ($18.0) million for the year, compared with ($16.5) million recognized in the prior year period. Financing cash flows were $25.0 million reflecting proceeds from sale of common stock and exercise of warrants and options. Following the reporting period for FY:20, CEL-SCI raised an additional $14.7 million announced December 11, 2020.

Final Event in IT-MATTERS Trial

After almost a decade, the IT-MATTERS clinical trial experienced its final event, reported in a press release on May 4, 2020. The study is now in the database lock and analysis phase. The event-driven trial for head and neck cancer added its first patients in 2011 in the US, Canada, UK, France and 20 other countries. 928 patients were enrolled, with the final individual treated in September 2016. The primary endpoint for the study was an overall survival benefit of 10% over standard of care alone in defined areas of the head and neck. With data in lock and analysis, once the results are made available to CEL-SCI, it will present findings at a conference.

For details on IT-MATTERS trial structure, please see our full report here.

In December 2020, the study entered its final stage of statistical analysis of all study data.

The analysis of data has taken much longer than we expected in an extended process that management has attributed to the broad geographical extent of the trial and impacts from the pandemic. During the data analysis we expect the following to take place:

‣ Analysis of primary and secondary endpoints

‣ Full review of dataset and safety results

‣ Presentation of results at major oncology conferences

‣ Publication of results in journals

Once the full dataset is available, CEL-SCI will meet with the FDA and other regulatory authorities to develop a plan for the submission of a biologics license application (BLA). Management did not provide any guidance regarding a timeline but we caution investors that unexpected delays due to the global pandemic may extend the final stage thus, the timing of any reporting of data could differ from our initial expectations. The CROs are fully responsible for the timing for the development of the data analysis and CEL-SCI management is required to disclose material information once available. Therefore, we expect CEL-SCI will share selected data with investors from the full analysis within a few days of it being available to the company.


CEL-SCI reached the final event in the IT-MATTERS trial in early May 2020 and we expect the final analysis to be available shortly. The company added $25.0 million in cash from financing over FY:20 and another $14.7 million in December 2020. We eagerly await results while CEL-SCI readies itself for potential BLA submission. The duration of the analysis period had exceeded our expectations and management has responded that the large scope of the trial and impacts from COVID have slowed the data analysis process. If Multikine is able to meet or surpass its primary endpoint of a 10% increase in overall survival as compared to standard of care alone, we see substantial upside to current levels. For summary financial data and our valuation, please see our full report here.

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